Gold Price Falls as U.S. Inflation Data Raises Fed Rate Hike Odds to 88%
TLDR
- Gold fell around 0.4% to $4,331 after hotter-than-expected U.S. inflation data
- Markets now price an 88% chance of a Fed rate hike this week
- Brent crude climbed toward $107 a barrel, adding pressure on gold
- ANZ maintains a 12-month gold price target of $5,400 an ounce
- UBS says investors may be looking past the next Fed move toward year-end gains
Gold prices dropped on Monday after U.S. inflation came in hotter than expected, raising the chances that the Federal Reserve will hike interest rates this week.
Gold was trading around $4,331 an ounce, falling 0.4% on the day. Gold Futures also declined 0.8% to $4,371.65. The metal has now fallen for three straight weeks, losing 1.8% last week alone.
The U.S. Dollar Index rose 0.3% to 99.42, adding more pressure on gold. A stronger dollar tends to make gold more expensive for buyers using other currencies.
Silver also slipped, with spot silver falling 1.0% to $63.88 an ounce. Platinum edged up 0.2% to $1,802.94.
Inflation Data Fuels Rate Hike Expectations
The core consumer price index rose 0.3% month on month in August, excluding food and energy. That reading pushed markets to price in roughly an 88% probability of a rate increase at this week’s Fed meeting.
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